In this episode, Udayan gives his insights on how investors can leverage the data deluge by keeping tabs on the right indicators to make smart bets.
In this era of information overload, investors are swamped with multiple metrics to measure the valuation of a stock. Some of these parameters can throw up conflicting pictures, making it difficult to ascertain a company's financial position.
The price-to-earnings ratio (PE ratio) is the most widely used metric to gauge a stock's intrinsic value. However, indicators such as enterprise value, revenue, and earnings -- that are available in the balance sheet of a company -- can help draw a sharp correlation between a stock's value and the underlying stability of the company's business.
Moreover, different businesses call for different forms of valuation. For the banking sector, the adjusted book value (ABV) presents a truer reflection of a stock's worth. With the democratisation of data, retail investors are faced with an onslaught of financial information that is available in real time. While this is good news, it can also be counterproductive.
In this episode of Stock Market Classroom, Udayan Mukherjee, Consulting Editor, CNBC TV18, gives his insights on how investors can leverage the data deluge by keeping tabs on the right indicators to make smart bets on the stock market.
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